Charities Concerned about IRS Proposal to Provide Social Security Numbers of Donors

Nonprofits are expressing concern about proposed regulations from the Internal Revenue Service and the Treasury Department that could give charities the option of providing Social Security numbers of donors who contribute more than $250 to their organizations.

The proposed regulations would allow, but not require, charitable nonprofits to file a new, separate information return with the IRS (in addition to the Form 990) by February 28 every year to substantiate contributions of more than $250 in value. The new informational tax return, called a “donee report,” would require the nonprofit to collect the donor’s name, address, and Social Security number or other taxpayer identification number. Nonprofits that use the option would also be required by that date to provide a copy to each donor listed (but only the portion that contains “information related to that donor”). The IRS is accepting public comments on the proposed rule change through December 16.

The National Council of Nonprofits, a group representing 25,000 not-for-profits, is taking a stand against the proposed rules. “The National Council of Nonprofits’ position is that the proposed voluntary reporting regime is inappropriate because the process could impose significant costs and burdens on nonprofit organizations, would create public confusion and disincentives for donors to support the work of nonprofits, and could lead fraudulent actors to increase targeting donors and reputable nonprofit organizations,” said the group in a statement. “Moreover, Treasury and the IRS state in the proposed rule that the current system of contemporaneous written acknowledgement of donations ‘works effectively, with the minimal burden on donors and donees.’ Adding a potentially confusing parallel reporting regime that needlessly introduces the risks of fraud, identity theft, and decreased donations to the community should be rejected.”

The group is encouraging nonprofit organizations and leaders to submit comments on the proposed regulations before a final decision is made, pointing out that a number of organizations and individuals have already submitted comments expressing concern.

The IRS emailed a statement last week to clarify its intent. “The IRS released proposed regulations in September that would potentially implement an optional, alternative way of substantiating donations for some donors that is provided by statute,” said the IRS. “This project was prompted because some donee organizations and donors were interested in using this option.” Read more on Accounting Today.